A Trailer Is Used To Transport, Which Is How Vehicles Are Commonly Defined And Understood and It Is Registered As A Vehicle

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Kiolbassa Provision Company (“Kiolbassa”) operates a smoked meat business out of San Antonio, Texas, where it keeps its offices, production space, and a warehouse for storage. Given the nature of its business, Kiolbassa purchased an Equipment Breakdown Policy (the “Policy”) from Travelers Property Casualty Company of America (“Travelers”) to cover damage to perishable goods when the damage is caused by a malfunctioning of “Covered Equipment” on Kiolbassa’s premises.

In Kiolbassa Provision Company, Incorporated v. Travelers Property Casualty Company of America, No. 21-51033, United States Court of Appeals, Fifth Circuit (June 2, 2022) the Fifth Circuit was asked to resolve whether a reefer trailer was a vehicle and, as a result, the loss was excluded.

FACTS

In August 2019, Kiolbassa ran out of storage space in its warehouse and loaded 49,016 pounds of organic beef trim onto a “reefer trailer” (a trailer with an attached refrigeration unit) located on its premises. The refrigeration unit malfunctioned; the beef spoiled; and Kiolbassa lost about $167,000 worth of product. Kiolbassa then filed an insurance claim under the Travelers policies.

Both claims were denied.

THE POLICY

Under Texas law, undefined policy terms must be given their common, ordinary meaning, which is determined with the aid of dictionaries, with those terms read contextually and in light of the rules of grammar and common usage.

The reefer trailer at issue falls plainly within the ordinary meaning of the term “vehicle.”

The insured bears the initial burden of showing that the claim is potentially within the insurance policy’s scope of coverage.
Instead,

Kiolbassa argued that the dictionary definitions are unreasonable in light of the Policy and that those definitions should be limited to a conveyance that can move on its own. The Texas Department of Transportation considers trailers to be vehicles, Tex. Transp. Code Ann. § 621.001(9); the trailer was registered with the Texas Department of Motor Vehicles; and the trailer was accordingly assigned a Vehicle Identification Number.

The court refused to sufficiently change the meaning of the word “vehicle” to exclude the reefer trailer from its definition. It refused to do so.

ZALMA OPINION

Sometimes all a court needs to resolve an insurance coverage dispute is to deal with the obvious. When a trailer is registered by the state as a “vehicle” it is, probably, for the purpose of determining insurance coverage, a vehicle.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

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